Posts Tagged ‘approaches’
Purveyors of conventional wisdom would have you believe that the very first thing you ought to do when setting up a new business is to create a business plan.
It doesn’t matter whether you are selling odds and ends on eBay from your living room or something larger and more complex,
Business plans are excellent and necessary. Far too few of us self-employed and freelance people use them.
They force us to spell out our objectives. We have to assign numbers to our expectations and assign a time-line to our goals. They become our roadmap and keep us on track.
But I suggest that you can’t make a business plan that is worth anything until you’ve done your homework.
And that means knowing what you want to do and how you want to do it. And determining that there is sufficient demand for your product to generate enough income to cover your costs and allow a profit.
In other words, before the business plan comes research.
If a body of knowledge already exists, it makes sense to tap into it and save you some work. The US Bureau of Labor Statistics and other such sources, for example, publish a great deal of demographic information. Some of it is very useful.
But it is also likely that as a creative sole-proprietor, meaningful statistics don’t exist about your specialty.
Many micro-businesses target a very specialized niche. And many owned by creative types exist to sell a product or service that don’t follow well-worn prototypes.
It is particularly difficult for such people to find meaningful published data.
If you fall into these categories, you’ll have to generate your own information.
Don’t limit your research to purely business data. You are building a life as well as a business.
Are the demands and conditions of your proposed business compatible with the life you want to create?
For example, illustrators often work on short deadlines – meaning that sometimes they have to work far into the night to complete a project on deadline. Plus, some clients are demanding and some do not pay on a timely basis. After all of that, can you still “love it” enough?
Or, maybe your business is such that sales fluctuate during the year. How will you make it through the lean months? Can you handle the uncertainty of a fluctuating income?
So, how do you find information?
First, if other people provide services similar to yours, talk to them. You will gain a lot of information quickly. Their answers to your questions will save you a lot of legwork and open your eyes to factors you may not have considered.
Try to talk to at least five or six people so you can get a range of viewpoints.
You can find them through trade associations, schools, word-of-mouth. If the locals are reluctant to share information – perhaps because they see you as direct competition – look for similar people in a different locale.
Second, create the information you need.
Mimic and simplify what large businesses do. Reduce their methods down to a level that is practical and affordable.
For example, perhaps you want to survey potential clients and customers to get feedback.
If you are a creating a micro-business on a shoe-string, it may not be affordable nor practical to commission a focus group. But you may be able to speak to potential targets informally or use direct mail to send a simplesurvey.
Eventually you’ll have to ‘put your toe in the water.’ Try it out in a small way – so you won’t lose much if it doesn’t work – and observe the results. Then experiment and modify as needed. Once it works to your liking you can plunge right in.
This approach, known by the technical term “trial and error,” can be applied to any facet of your business.
After all, even the largest producers test market new products before rolling them out.
Put some parameters around your efforts. Decide, in advance, how much time you want to allow and how much you want to budget.
Then test, test, test.
Use trial and error for every aspect of your business. Experiment with different ways of packaging your services, different rates and prices, different types of marketing, etc.
You’ll soon find that certain approaches work better than others. Eventually your experience and data will suggest viable strategies.
And then you’ll be ready to create your business plan.
While technical analysis concentrates on studying the behavior of the market price, fundamental analysis focuses on the analysis of economic forces that generate the upward price movement, down or consolidation.
The fundamental approach examines all relevant factors affecting the market price in order to determine the intrinsic value of that particular market. The intrinsic value is what the fundamentals say that an action should be worth based on the laws of supply and demand. If this intrinsic value is below the current market price, then the share price of the company is overvalued and needs to sell. If the market price is below the intrinsic value, then this undervalued and must be purchased.
Both approaches attempt to solve the same problem: to determine in which direction prices will move. Each one does it differently. The fundamental analyst studies the causes that move a market, the technician studies the effects. The coach, of course, thinks that the effect is all you need to know and that the reasons or causes are not necessary for analysis. The fundamentalist always know why.
Many investors are considered: fundamental or technical. In fact, many fundamentalists have a broad knowledge of graphic interpretation. Similarly, many technicians have a basic understanding of the fundamentals. The problem is that in many instances the fundamentals and charts are in conflict. Usually at the beginning of an important trend, the fundamentals can not explain what is happening. It is at this critical moment when the two approaches differ. Later than sooner, once again be in sync but it’s too late for the investor to do something.
One explanation for these differences is that the price tends to stay ahead of the fundamentals, i.e. acts as a leading indicator of the fundamentals. While the fundamentals and acquaintances have been discounted by the market, prices are reacting to fundamentals unknown. Some of the markets up or down the most important have started with almost no perceptible change in the fundamentals. By the time these changes becomes evident and the market trend is in advanced stages.
With practice, the coach develops an ability to read and rely on charts and indicators derived from the behavior of the price and volume. Learn to invest trust in those times when market behavior goes against what is perceived through the fundamentals. The coach does not wait for undisclosed fundamentals are confirmed by the market.
By accepting the premises of technical analysis, you understand that the experts consider that their way of acting is superior to that of the fundamentalists. If an investor had to choose one of two approaches, the decision logic should be the technical analysis. If the fundamentals are reflected in the market price, then the study of these fundamental becomes irrelevant. Reading the graphic becomes a version of the fundamental analysis. But you can not say the same fundamental analysis. This analysis does not include a study of the price. It is possible to negotiate on the market using only technical analysis, but it is difficult to imagine that an investor can be negotiated taking into account only the fundamental.